Mr BRADBURY (Parliamentary Secretary to the Treasurer) (11:59 PM)
—It is a privilege to contribute to the debate on the Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011 and the Income Tax Rates Amendment (Temporary Flood Reconstruction Levy) Bill 2011. It is a key debate that is at the centre of the discussion about the future of this country. Obviously, we have been through a summer of extraordinary natural disasters. I want to take this opportunity, as I have done in the House previously, to convey my condolences to those who have been impacted by the natural disasters in this country. I would also like to take this opportunity to acknowledge that, just across the Tasman, our neighbours—our brothers and sisters in New Zealand—have been so deeply affected by the earthquake in Christchurch. They have already, of course, suffered the devastation of the earlier quakes, but with what has occurred over the last 24 hours or so, having gone through what we have been through as a nation, our hearts certainly go out to those across the Tasman. Indeed, the Australian government has already made various announcements around how it intends to provide assistance to the New Zealand government.

As I indicated, I have spoken at length in the House previously about the devastating natural disasters that we have faced in this country. In that respect, I wish to contain my comments principally to the debate around how we as a nation intend to fund the recovery effort. That is what these bills are about. They go to how we as a government and how the Australian people intend to ensure that we do not leave those affected by these natural disasters behind but that we step up to the plate and do what is required to rebuild these communities. There are clear and obvious reasons as to why that is important. It is important not just to those communities, though clearly it is; equally it is important to communities all around Australia. There are and will continue to be flow-on effects that will be felt in supermarkets and across lounge rooms and dinner tables around this country. There are very pressing and urgent needs of Australians in the areas that have been affected by those disasters, but there are equally important but more wide-ranging impacts to be felt right across the country.

The scale of what is required has been set out by many speakers in this debate. The early estimates are that the cost of rebuilding will be somewhere in the order of $5.6 billion—that is what will be required from the federal government. That does not include the effects of Cyclone Yasi, so, obviously, the task that lies ahead is significant and it requires us as a nation to work out how we intend to fund that. There are a range of options around how we may seek to fund that. The government has embarked upon the course of determining that some of those funds could be raised in the form of a flood levy. Also, we are deferring some infrastructure projects and embarking upon some expenditure cuts. We believe that this is an appropriate, fair and balanced mix of measures to address the need for us to raise this $5.6 billion to rebuild communities in the areas affected by the natural disasters.

There has, of course, been a lot of debate around whether or not this is an appropriate means through which the government should be funding the recovery effort, and that is a debate that we very much welcome. We think it is entirely reasonable for Australians to ask the question: is this the most appropriate way for us as a nation to make our contribution towards the rebuilding effort? It has been said by many in this debate that the Australian people have been very generous in their private donations. That needs to be acknowledged. We should not be surprised by it, because the Australian people have always shown a preparedness to step forward to help out—

Mr BRADBURY
—Indeed, as the shadow minister for tourism indicates, we will all step forward and make contributions to assist those in New Zealand as well. I think it is beyond contention that we as a people are generous in our private donations, but, whichever way you look at it, the total amount of donations that has been raised through the Queensland Premier’s Disaster Relief Appeal is somewhere in the order of $200 million. Those moneys will be applied to certain purposes, but that amount falls significantly short of the overall rebuilding cost. We can think about it in these terms: $5.6 billion is almost 30 times the amount donated through the relief appeal. We welcome the donations and thank everyone who has dug deep to assist those in the areas affected by the natural disasters, but as a government we have to find the funds to do what every Australian should expect—that, if they were in a similar situation, the government would step in and ensure that that rebuilding effort was facilitated.

In raising these funds, most of the discussion has centred on the flood levy. I have to say that I am surprised that the opposition has gone down the path of opposing this levy.

Mr BRADBURY
—I am surprised because I know that on many occasions in the past when levies, particularly directed towards confronting challenges in the national interest, were proposed by those on the other side when they were in government they were able to rely on the support of the Labor Party.

Mr Baldwin
—The community weren’t donating of their own free will at that time.

Mr BRADBURY
—The community were donating in other ways in respect of some of those levies—for example, through the prices that consumers were paying—but can we just have a look at this question of levies. There is almost a religious fervour in the way in which people on the other side are opposed to the imposition of a levy. You would be forgiven for thinking that this was the first levy to be imposed on the Australian people, but indeed it is not. In recent history we can see that the coalition in particular has made an art form of introducing levies.

There was the gun buyback levy, for example. I am not disputing the merits of some of these levies, because they were applied to confronting some challenges in the national interest. There was the East Timor intervention—the subject of a levy which was not implemented because it was not required by the time it was set to come into effect. There was the dairy industry restructure, the payout of the Ansett staff, terrorism reinsurance and the sugar industry restructure. Those opposite—who say ‘It is almost criminal for a government to come forward and do such an outrageous thing as to impose a levy on the community’—had great form on this in government. There was not one levy, not two levies, not three levies but six levies—you could call it a bevy of levies—and the mother of all levies, in a sense, was the one proposed by the Leader of the Opposition at the last election. We know that those on the other side do not really like to talk about this because it was a matter of some division—

The DEPUTY SPEAKER(Ms AE Burke)—The member for Paterson will desist, and the parliamentary secretary will stop responding to interjections.

Mr BRADBURY
—I make the point that not only is the government not opposed to paid parental leave but also we proudly stand here as the first government in Australia’s history to implement a paid parental leave scheme. An alternative scheme was proposed which sought to raise the funds to deliver the scheme by way of an impost—a levy, as I recall. I do not want to go through the entire history of that, but we all remember that the first thing that the Leader of the Opposition said when he came into that role was that he was not going to increase taxes; yet the first policy he announced was an increased levy. There was a bit of a fudge during the election campaign suggesting that it was not a levy at all or was only a temporary levy, but at the end of the day it was a levy.

Those on the other side proposed a levy for a worthy cause. We believe that paid parental leave is a worthy cause, but it was not something that required an immediate and urgent response. Indeed, I think there is a much stronger argument that those sorts of expenditures should be covered through general expenditure restraint or expenditure cuts, but that levy was not going to be covered that way. So on the other side we have those who supported six levies—in fact, they supported seven levies, including the levy that we never got because the Australian people got in the way of it—yet they are opposed to this levy. I think the truth is that they are opposed not to levies in general but to a Labor levy. Liberal levies are good; Labor levies are obviously not so good.

A stream of economists have come forward to indicate that they believe that this levy is a balanced package. Craig James from Commsec said it best:

This is the right levy for the times—modest in size, temporary, progressive and applying to those on higher incomes.

… … …

The fact that the Government is cutting spending and applying a new levy on Australian consumers may reduce the need or urgency for the Reserve Bank to lift interest rates over the year.

There is an important element in the government’s response to the disaster relief effort—that is, the way in which the infrastructure deferrals that have been put on the table will not only reduce the expenditure of government and give us the capacity to meet the rebuilding task but also take some of the pressure off the capacity constraints that the Australian economy is facing and thereby take some pressure off interest rates. The opposition’s response to the floods was, ‘We’re going to make a whole series of cuts.’ In fact, they were not cuts; they were all deferrals. They are unlike the deferrals that we have proposed, however, which are specifically infrastructure deferrals, the purpose of which is to take some of the heat out of the economy so that where there are capacity constraints and skills shortages we will not as a result of the rebuilding effort put more pressure on interest rates, inflation and the cost of living.

That is a sensible, rational approach to economic policy, and I think that the underlying rationale of the response from the opposition falls a long way short. A number of the cuts, particularly those to the aid funding to Indonesian schools, were not motivated by anything other than some of the more malicious intent that we have come to know about thanks to leaks. We now know that there was a discussion going on in the shadow cabinet around what might be in the national interest, and that discussion had nothing to do with the rebuilding effort but a lot to do with stirring up resentment and sensitivities in communities that may well be very far away from the areas affected by the floods.

This is not only a temporary levy but also a modest one. A bit earlier, I heard the member for Mitchell’s contribution and was intrigued by it. On the one hand, he complained that higher income people did not receive handouts when the government made its stimulus payments and, on the other hand, said that he is a great advocate of small government. Somehow he wants to reconcile a commitment to small government with big, fat, middle-class welfare contributions. His contribution was interesting, but thankfully for the Australian people he is a long way from the Treasury bench—in fact, he is a long way from his party’s front bench. That is probably a good thing for the debate around the management of economic policy in this country.

As I said, this levy is of a modest nature. The point has been made that those earning under $50,000 will not pay anything, while those earning above $50,000 will pay incrementally. But one of the points that has not been made very clearly throughout this debate is the relationship between the tax cuts that have been delivered over the last few years and the modest, temporary amount that will be required over the coming year. For example, someone on $120,000 a year will pay $8.65 per week under the levy, but through the tax cuts of 2008, 2009 and 2010 they have received a cut of $52.88. This levy is temporary in nature, and people will not be subjected to that imposition at the end of the following financial year. So we think it is an important measure and a sensible one as well. On 9 March 2010, the opposition leader, in defending his paid parental leave scheme, said:

Sometimes, for very, very important social reasons, for national interest reasons, you’ve got to say, ‘We need the money.’